$FB – run amok and tumbling down…

Facebook (FB) has been able to run on its own since being founded and going public.

So what, as it turns, does the company do? It runs amok.

As the NEW YORK TIMES INVESTIGATIVE REPORT revealed this week the company has been reckless and irresponsible and instrumental in the Russian invasion of the US 2016 elections, and its executives have “delayed, denied, and deflected” criticism through the entire controversy.

We’re talking sheer greed here, capitalism as its ugliest.

But it appears its time of running unfettered is up as Congress focuses on bringing regulations to finally make it responsible for the harm it has done and to insure that it does not do it again. In the end Facebook will be better off for it…or it will be dead (hard to believe? remember MySpace?).

As a result the FB stock (see chart below) has proved once again in financial markets’ store there all always both escalators up and escalators down,

Regardless, to state the obvious, while investors may see profits evaporate in fleeting time, traders can make money on both the ups and and the downs.

(click on the chart for a larger view)

$AAPL giveth, Apple taketh away…

There has not been much to say about AAPL these last couple of years as it’s made a near parabolic rise and taken the entire market with it.

Its phone has made the company tons of cash and still does. And it has used a lot of the cash to buy back its own stock, by some accounts as much as $300 billion to propel it past an unprecedented $1 trillion market cap.

But there-in, as far as the stock is concerned, lies rub. Most likely Apple has been and still the biggest buyer of AAPL. It been a mugger sticking a phone in the face of investors and saying give me your stock.

What if it ends up being essentially the only buyer?

And despite all of the fundamentals in favor of the company, those fundamentals can not go on forever. AAPL has been competing with itself for years (now there’s a business plan…) but now others are joining in are beginning to take a toll, and the iPhone keeps getting more and more expensive, and the tax breaks it gets or maneuvers for itself will balance out eventually, and evidently the biggest fundamental of all is still and maybe will always loom over the company – Steve Jobs is still dead.

As AAPL eventually and inevitably falls, the larger question arises: Since it is in all of the big three indexes – the DOW, S&P and Nasdaq — will it take the general market with it to the downside the way it has to the upside?

(click on the chart for a larger view)

$LVS $WYNN – “No one knows how to bankrupt casinos like I do.”

I made up the quote in the headline on this post but I’d bet the first thought of everyone — EVERYONE — who read it was Donald Trump said that?!

He might as well have (maybe he has sometime in his daily incoherence). Before he got into the money laundering business with the Russian Oligarchs, he owned casinos in Atlantic City. They all went broke.

He doesn’t own any gambling palaces anymore but it appears as President he’d like to help bankrupt those of his friends as well, like a hobby on the side. Both Sheldon Adelson and Steve Wynn are big Trump supports. Or at least they have been. Looking at what’s happening to the shares of their companies, one wonders if they still are. If they are, what’s the matter with them?

This probably has to do with the way Trump has managed to get the Chinese to quit playing games of chance but who knows? Maybe it’s just his “golden touch” in casinos is contagious? Or maybe, a more obviously, it might be, as much as fools wants to tout the supposed merits of a businessman in the White House, every fool needs to remember the last one was Herbert Hoover.

The worst is likely not over for LVS and WYNN, and the down staircases like these here (see the charts below) are likely going to get built soon in a lot of other stocks, and a lot of market sectors (even now take a glance at housing stocks and bank stocks and place bets).

(click on the charts for a larger view)

$LVS and $WYNN – winning on the losing gambling stocks

The big tumble in the gambling stocks is probably another fall out (fall down?) from the Trump trade war with China.

Who woulda thunk the Chinese would quit the gaming tables in Macao, where both LVS and WYNN have major casinos, over a little tariff tiff?

Then again, this might be Steve Wynn, at WYNN, shuffling off the world stage in a Me-Too shadow, or maybe Sheldon Adelson, at LVS and one of Trump’s biggest campaign contributors, getting a mega-dose of whatever…

As they say, you never know how the chips are going to fall.

Actually, you can know.

Take those rectangles on the LVS and WYNN at the top of the charts below…Those are Darvas Boxes, pioneered by Nicolas Darvas years ago. Play with those enough by drawing boxes around price consolidations and taking the trade as it either comes out of the top or in the cast of these two out of the bottom of the box, and then add in a moving average to mark the path of least resistance and one can be up 23% since summer in LVS and 35% in WYNN by being short the downs in those stocks.

There is also a lot of simplicity in the gamble that is the stock-market game.

Also, take note these leaders in the gaming sector also show even in a raging bull market, there’s always a bear market somewhere.

So what now? More to come. There are no signs these two stocks are finished with their fall, and they will have to base, going sideways, for a long time across some bottom before they can recovers and have any chance of racking up winnings on the long side again.

(click on the chart for a larger view)

#CoalStocks – thinking about shorting BTU, CLD…again.

Just thinking about it. This is a heads up. Don’t quite have the triggers I’d be comfortable with yet.

But unless the stocks surprise further to the upside, the prospects for shorting them again are getting closer day by day.

These stocks have been rallying in recent months on the desperate hope President Trump will do something to revive the industry. There is no chance of that happening. He is paying lip service, but is hardly interested or able to do anything else. Remember these stocks, long term, have fallen faster than dead canaries. This is an industry slammed by cheaper cleaner natural gas and it is facing an inevitable death at the hands of renewable energy.

CLD, once the stock dropped below $5 a share, could easily fade to dead money around $1, and maybe even go off the board like so many others in this sector – Patriot Coal, Walter Energy… BTU has already been through a bankruptcy, taking out decades of shareholder equity, and now has restructured and emerged to try to do it again.

I’m not one for fundamentals but this industry blow happened just yesterday:

LAST COAL PORT PROPOSAL ON THE WEST COAST DIES

Businessmen, especially coal executives, always complain that environmentalists never let them do anything. That is not true. Environmentalists don’t let them do stupid things. All of coal, once an evil necessity, is now a stupid thing.

So, trading-wise, I’m looking for more signs of weakness, negative candles, breaking supports, indicator divergences before sealing the shafts (see the charts below). Call it waiting for the bloom to come off the black Trump rose.

(click on each chart for a larger view)

All information, presentations and discussions on this site are no more than a journal of my personal stock market thinking and trading. This site is for entertainment purposes alone, and nothing here is to be construed in any way as direct investment advice.

#MarketTiming – Stocks To Short

With the general market trudging toward a overall sell signal, several big-cap stocks gave sell signals today and are probably worth a short on tomorrow’s open for a scalp (and maybe more).

Likely, the AAPL miss on earnings today, will be a trigger for a broader market decline tomorrow.  Must keep in mind that the Federal Reserve Open Market Committee will conclude its April meeting tomorrow also.

In other words, there are cross currents galore but…when is it not so?

These are liquid enough for options trading (buying puts, shorting calls, verticals, etc…).

The stocks are:

  • WMT
  • T
  • VZ
  • GOOGL
  • MDT

Interesting that both T and VZ registered sells today, possibly in reaction to the sell-off reversal day in T-Mobile (TMUS) on earnings.  TMUS itself is obviously also a worthy candidate for a short, looking for follow-through on today’s action.

(right click on the chart for a larger view)

TMUS

 

#Greed top could lead to #SPY stumble

CNN Money’s “Fear and Greed Index”, a calculation of seven key market indicators in order to gauge the primary emotions underlying the stock market, appears to have put in a double top at an extreme greed level.

Historically, this pattern has led to significant sell-offs in the general market as investors’ and traders’ greed, fueled by the market’s recent rally, cycle down once again to a prevalent fear level.

There is really no way to tell how far the S&P 500 index (SPX, also the SPY ETF) will fall but the last time this down cycle took place the SPY fell from a high of 211 to a low of 185 (about 250 SPX points, a 10% or so correction). There is no guarantee it will stop there.

Regardless, this is an excellent shorting opportunity across the face of the stock market, just as it will eventually lead to an fine buying opportunity later on.

Market timing.  They say it can’t be done but a study of the chart below should make it rather obvious “they” don’t know what they are talking about.

(right click on the chart to view a larger image)

FEAR_AND_GREED_2016-04-11_1609

#MarketTiming – stock shorts

Market Context: Bearish. 

All trades on sells or shorts from open of 4/5/16.

Swing ETFs: UVXY (from 20.65), SQQQ (18.51), TZA (44.30), UPRO (62.50), NUGT (59.00).

Day/Swing Trades (short) for open of 4/11/16 (options-liquid stocks):

  • WYNN
  • SBUX
  • LLY
  • MRK
  • RTN
  • LMT
  • JNJ
  • MCD
  • BMY

Notable that so many big pharma stocks have triggered sells.

Featured short (put play): PFE.

(click on chart for a larger view)

PFE_2016-04-10_1937

$COMPQ – chop, chop, finally plop!

December’s Nasdaq composite ($COMPQ $COMPX) closed lower than November on higher volume.

In the past that was as simple and elegant a longer-term sell signal for the general market as there was (see red vertical lines on the chart below).

In the past two years, however, it gave way to chopping up and down with alternating buy signals (closing higher on higher monthly volume, the green lines on the chart below)…it seemed almost monthly.  Not quite sure, but I suspect that was because of the Fed Reserve QE efforts in the market making it hard to get any traditional bull-market correction against cheap credit constantly infusing the market (also suspect we may be paying dearly for that Fed manipulation now).

But it appears the simplicity and elegance of the sell is back, and compelling.  If so, the market’s general indexes  (DOW. SPX, NDX, RUT) are going down until further notice, a bear-market trading and investing environment of “sell the bounces” (one is coming up soon) instead of the bull-market dictum to “buy the dips.”

P.S. I first learned the value of this from a poster named “SemiBizz” on Traders-Talk.Com. when he ended up calling the top prior to the 2008 bear market (see the blue oval in the middle of the chart).  He deserves all the credit for his contribution to that most difficult of market tasks — calling tops.

(right click on the chart for a larger image)

NASDAQ_PLOP

$GPRO – not much go anymore

Nick Woodman, the founder and CEO of GoPro Inc., is obviously a fun guy.  He got the idea for the action-camera company on a surfing trip to Australia. He’s reportedly an adrenaline junkie in every which way but loose.  Since GoPro was founded in 2002 and went public last year, he’s racked up an estimated $1.3 billion net worth.  He’s generous privately and a philanthropist publicly. CNBC says he’s ordered a $50-millon yacht that can have a crew of 13.  Practically every photo shows him either smiling from wall to wall or laughing uproariously.

But…

But GPRO, his company’s stock, is down 80% from its high and down 41% from its IPO close.  (It’s up 65 percent on my latest long-term short signal.)  The stock had a great run but that obviously is a over.  It is a niche gadget company that has likely saturated its customer demand.  It may base down here at 18 or so but there’s no real support underneath it and the downtrend continues.

So, as the pleasant Mr. Woodman sails the seven seas in his new yacht, the rest of us can avoid his stock which may end up no bigger than a dinghy.

(right click on the chart to view a larger image)

Gpro2015-12-24_0601